Oil prices have dropped on lower global consumption coupled with an increase in surplus production capacity.
Talks between Iran and international powers at the weekend to ease international sanctions against Iran in return for restraints on its nuclear programme failed to reach a deal. The sanctions on Iran have removed more than 1 mbd from world oil markets, and any increase in supply could push oil prices lower. Negotiations will resume on Nov. 20.
Saudi Arabia reduced its crude output to 9.75 mbd in October, from 10.2 mbd in September.
Worsening tensions in Libya are supporting prices. Oil ports and fields are seized by a mix of militias, tribes and civil servants seeking political rights or higher pay.
A sharp cutback in Russian production and Norwegian gas exports in early November is expected to support gas prices in the weeks to come. Concerns about a lack of peak winter capacity have eased as it is clearer now that the increase in Russian production in October was tied to gas storage shortage in Germany, Ukraine and other countries.
The final phase of the NEL pipeline has been completed and is now in the test phase, which may give fluctuations in gas flows in November. Once the pipeline is fully up and running early December, Russia’s ability to push more gas into areas that will directly impact TTF and NCG will make a difference in the relationship among spot benchmarks and between spot and contract prices.
Changes in key European pipeline supply in mill cubic metres/day (Source: PIRA)
German gas pipelines (Source: Wingas)